Washington, February 22 The US Federal Reserve calculates that it will have to maintain the pace of its restrictive monetary policy for a good part of 2023 and does not rule out increasing it if necessary to keep inflation down.
This is what the Fed underlines in the minutes of the meeting of January 31 and February 1, when it decided to raise interest rates again – the eighth in a row – although by 0.25 points, by less than the previous ones.
Members of the Open Market Committee were clear from the start of this meeting that there was a need to raise interest rates again, although there was also agreement from the start that said hike would be slow down.
“The restrictive policy should be maintained until the data shows that inflation is falling significantly and heading towards 2%”, the objective set by this institution. And that, the committee members added, “will probably take some time,” according to the minutes.
There is no expectation in the minutes of halting short-term rate hikes, and there is no assurance that the slowing of said hikes can be sustained.
The members of the committee thus agreed to be “ready” to modify the pace of the increases if “risks” appeared likely to hinder the main objective of reducing inflation.
The minutes do not contain any divergences on monetary policy, although there are differing views on the course of the economy.
Many committee members believe slowing U.S. economic growth, though some continue to speak of a “mild recession in 2023,” and most pointed to the “notable uncertainties” ahead of a deeper decline. than expected to “persistent” inflation.
And although in their macroeconomic analysis they speak of “moderate” growth in spending and activity, they also underlined the strength that the labor market continues to maintain despite the rate hikes already agreed.
They also agreed that the Russian invasion of Ukraine continues to cause an “enormous human and economic cost” and continues to contribute to great global uncertainty. This is why they promised to remain “very attentive” to inflationary risks. ECE
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